Amir-Ali Esmaily, from Lisburn Road in Belfast, is alleged to have committed the offence between July 13 and July 18 of this year at a house his family owns at Bradley Park in Derry.

A detective sergeant from the PSNI's Major Investigations Team told Deputy District Judge James McFarland that police believed the defendant kept the rifle and ammunition on behalf of the Real IRA and that the defendant had links to dissident republicans.

A dozen armed police officers were on duty inside and outside the Bishop Street courthouse for yesterday's remand hearing.

The police witness said the defendant's houses at Lisburn Road and Bradley Park were searched by the police as a result of information they'd received. Two imitation firearms and an air rifle were found in the defendant's Belfast home and the assault rifle and loaded magazine, as well as an imitation firearm, were found in his Derry property.

"We suspect this assault rifle is linked to a Real IRA show of strength last March," he told the court. "We suspect this because we have compared photographs of that show of strength with this weapon. Four people are currently in custody in the Republic of Ireland in relation to the show of strength.

We believe this weapon was being held on behalf of the Real IRA and that it would have been used potentially for intimidation and in attacks", he said.

The detective sergeant said that, after he was arrested, the defendant denied, for the first forty-eight hours, any knowledge of the assault rifle which was found wrapped in plastic sheets in a boiler house in the garden of his Bradley Park home.

"He then made admissions in relation to the handling of the weapon", he said. "This man is trained in firearms, this man has contacts with dissident republicans", he added.

The police witness said the defendant held Irish and Iranian passports and that detectives involved in the case believed he had possession of the assault rifle for five days. He said he would have "strong concerns" about the defendant being granted any form of bail: "There are still other witnesses to be spoken to in relation to these matters.

Loaded magazine 'ready to go'

"We fear he might try to influence these witnesses or persons from the Real IRA might attempt to influence the witnesses on his behalf. The loaded magazine was ready to go and the weapon appears to be viable", he said.

Applying for bail, defence barrister Peter Coiley said the defendant had been interviewed fourteen times over six days in custody. He said the defendant was willing to surrender his passports and that the defendant's father, a wealthy businessman from Belfast, was willing to deposit a substantial cash surety.

Mr. Coiley said his client was born in Iran but lived most of his life in Northern Ireland. His father is Iranian and his mother comes from Derry. The barrister said other witnesses had corroborated the defendant's version of events to the police.

"There is nothing to suggest that he has links with members of dissident republican organisations and he has no explanation in relation to the rifle being found", he said.

The District Judge recalled the detective sergeant to the witness box and asked him if it was the defendant's claim that "someone left the rifle there?" The police officer said he believed that would be extremely unlikely.

"Weapons of this nature are of substantially high value and we do not believe that the Real IRA would simply leave it at the location where it was found", he said.

However, Mr. McFarland released the defendant on his own bail of £5,000 plus a surety of £100,000, £40,000 of which had to be deposited in court. He also ordered the defendant to surrender his passports and to reside at his father's Wellington Park home in Belfast until his next court appearance on August 14.

The District Judge also ordered the defendant to sign daily at Lisburn Road police station and to stay out of Derry city and county except when he's due to appear in court.